You rely on your insurance company to provide you with the coverage you deserve when unfortunate accidents happen. However, this isn’t always the case. There are instances when insurance companies fail to fulfill their obligations, acting in bad faith and putting their interests ahead of their policyholders. By understanding and recognizing the elements of bad faith, you can navigate the claims process effectively and protect your rights and interests.

Understanding Bad Faith by Insurance Companies

Insurance companies have a legal duty to handle claims promptly, fairly, and with utmost honesty. This duty of good faith is an implied covenant in every insurance contract and encompasses the duties of conducting thorough investigations, fairly evaluating claims, and providing timely communication and transparency throughout the claims process. However, at the end of the day, insurance companies are for-profit businesses that have the goal of minimizing their expenses and protecting their shareholders. This is ultimately what drives the insurance company to put themselves in front of you and act in bad faith.

Signs That Your Insurance Company May Be Acting in Bad Faith

It’s your right to receive the coverage you deserve. Here are some common signs of bad faith to look out for.

Unreasonable Delay in Claim Processing

After your accident, you need a quick claim process to get you back on your feet. Any excessive delays without a valid reason can create additional financial and emotional strain on policyholders who are relying on their claim settlement for their losses.

Unjustified Denial of Claims

An unreasonable denial of a claim is one of the most common signs of insurance bad faith and happens when your insurance company denies your claim without providing a valid reason or fails to adequately explain the basis for the denial.

Failure to Thoroughly Investigate Claims

When the insurance company fails to conduct a comprehensive investigation into your claim, it is a sign of bad faith. When you signed your insurance policy, your insurance company agreed to fully investigate if you filed a claim. An inadequate investigation can lead to a denial of a claim or an unreasonably low settlement, leaving you with nothing but stress.

Offering Unreasonably Low Settlements

A low settlement raises concern for bad faith. Insurers have a duty to provide reasonable compensation, but in hopes, you’ll say yes, they may offer you a low settlement far below the true value. The bad faith insurance lawyers, Dawson & Rosenthal, P.C., say to never accept a settlement offer without first seeking legal advice. These offers are usually dishonest attempts to quickly settle the claim instead of fully compensating for your damages.

Breach of Policy Terms

Insurance policies clearly outline the terms and conditions under which coverage is provided. Within these agreements, there is a duty to provide coverage for valid claims. A failure to do so is a clear breach of contract and act of bad faith.

Steps to Take if You Suspect Bad Faith

After you suspect your insurance company is acting in bad faith, it’s essential to take the following steps

  1. Gather documentation: Collect all relevant documents related to your insurance policy, claim documentation, insurance adjusters, and any evidence supporting your suspicions of bad faith.
  2. Consult with a bad faith insurance attorney: Seek advice from an attorney who specializes in insurance law. They can review your policy, claim documents, and actions of the insurance company to strengthen your case. Furthermore, an attorney will help you understand the options available to you and assist in navigating the claims dispute process
  3. File a complaint: File a complaint with your state’s insurance regulatory authority. They oversee the insurance industry and can investigate allegations of bad faith conduct. 
  4. Negotiations: The final step is to engage in negotiations with the insurance company. This is where your lawyer will shine as they have plenty of experience in these situations and know exactly how to successfully navigate them. They will help you present your case effectively and advocate for a fair resolution.
  5. Litigation if necessary: In the case of litigation, they will guide you through the process, gather evidence, present your case, and seek the appropriate legal remedies on your behalf

While insurance is a great and smart way for you to cover your losses, insurance companies might act in bad faith to do the same. Experiencing bad faith action from an insurance company can be a frustrating and distressing ordeal. When you needed help the most, the insurance company wasn’t there for you, leaving you with even more burdens after your accident. That’s why being able to recognize signs of bad faith is crucial to protecting your rights as a policyholder.